July 30, 2013

2000: The Internet Bubble Pops - And So Does A Career!

Top songs from the year that proved that the world would not end after the dire predictions of Y2K pundits:

"Breathe" - Faith Hill

"Smooth" - Santana, featuring Rob Thomas

"Say My Name" - Destiny's Child

"I Wanna Know" - Joe

"Everything You Want" - Vertical Horizon

Remember, during 1998, I sandbagged the plan for 1999. Sandbagging led to record profit during 1999.Because we had an approximate 20% merchandise productivity hit between 1997 and 1998, it became terribly hard to acquire new customers. Not surprisingly, when existing customers like your product 20% less than in the past, new customer growth will drop by 20% as well. Well, it will actually drop by more than 20%, because you cannot circulate as deep because horrific merchandise productivity leads to highly unprofitable new customer acquisition activities.Well, Eddie Bauer was owned by Spiegel. And Spiegel was owned by Otto Versand. And Otto Versand was not happy with my customer acquisition plans. So my Inventory Director and I had to travel to Chicago (along with our SVP of Marketing) ... and the two of us (Inventory Director and I) had to defend our customer acquisition plans. Heck, one might ask, "why would the inventory director have to defend customer acquisition plans?" Well, maybe somebody learned that the two of us sandbagged 1999 and wanted us to account for our actions!Mind you, nobody from the merchandising team had to go defend the merchandise productivity that led to a lousy customer acquisition plan.Predictably, I was informed that our customer acquisition strategies were flawed. My fault.In early 2000, with the online channel surging north of $100,000,000, our catalog productivity crumbled further ... customers were switching from catalog shopping to online shopping (yes, I know, the catalog drives online performance, in some cases). So we were called into another meeting, this time with the Executives from Spiegel, our parent company. They were terribly unhappy with our customer acquisition strategies as well. That's when I presented the results of forecasts ... forecasts that suggested that e-commerce was going to be the future of the business, and that we needed to focus on online marketing strategies to have a chance to grow.That presentation didn't go well, either.Merchandise productivity impacts everything. Lousy merchandising productivity puts pressure on those who are responsible for other areas of the business. And channel shift is an important topic (ask e-commerce folks serving a 22-39 year old customer ... a customer that is now fleeing traditional e-commerce).Sandbagging was still a good idea - but it led to a set of consequences where the perception was that merchandising problems were "fixed", when in reality, we just set a really low plan and then crushed it via excellent management of expenses.At some point, you realize you've taken a process as far as you can take it.It was time for a change.By March 1, I was working at Avenue A, an online advertising startup in Downtown Seattle ... armed with $2,000,000 of paper stock that would vest in 1-4 years. I was part of the "new economy"! I would help "monetize eyeballs".By June 1, my paper stock was worthless.

The internet bubble had popped.My career trajectory had popped.Spiegel would go bankrupt a few years later, taking Eddie Bauer down with it.Careers have peaks and valleys. By Thanksgiving 2000, my career was not in a valley, it was in a Gorge!And then ... serendipity happened ... as it does with most careers. An opportunity presented itself. By January 1, 2001, I'd be the new Vice President of Direct Marketing at Nordstrom. I spent six years as an analyst ... I spent six years going from Manager to Director to Vice President. Your career will evolve unpredictably, no doubt about it.It was a new opportunity, of course, that came with increased accountability.

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Kevin Hillstrom, President, MineThatData

Kevin is President of MineThatData, a consultancy that helps CEOs understand the complex relationship between Customers, Advertising, Products, Brands, and Channels. Kevin supports a diverse set of clients, including internet startups, thirty million dollar catalog merchants, international brands, and billion dollar multichannel retailers. Kevin is frequently quoted in the mainstream media, including the New York Times, Boston Globe, and Forbes Magazine.

Prior to founding MineThatData, Kevin held various roles at leading multichannel brands, including Vice President of Database Marketing at Nordstrom, Director of Circulation at Eddie Bauer, and Manager of Analytical Services at Lands' End.

You may contact kevin at kevinh@minethatdata.com.

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